9 Signs Home Ownership Isn’t for You

Owning a home is the big dream for so many people. But sometimes home ownership is a big ol’ pain in the arse. Like when your shingles blow off in a windstorm. Or the furnace breaks. Or you’re trying to sell and no one wants to buy so you can’t move and get on with your life.

Home ownership isn’t for everyone. Some folks are happier and better off renting. There’s nothing wrong with that choice. And don’t fall for the crap that you’re throwing your life and money away. Just point out that of your best-friend’s $2,100 a month mortgage payment, $2,084 is going to interest at least for the first few years.

Before you jump into the home-ownership pool, it would behoove you to really think about taking such a big step. Are you really committed to home ownership? Not the dreamy, picket-fence home ownership everyone is in love with, but the paying for all the crap that happens home-ownership.

1. You don’t make enough. People are under the misconception that home ownership costs the same as renting. It does not. When you compare renting to owning a home in the same area, of the same quality, home ownership is more expensive. According to the Stats Man, Homeowners spend $57,649 a year compared to renters who spend $32,536, which is a significant difference (over $25,000). Just being able to make the mortgage payments isn’t enough. If you don’t add up all the other costs with which you’ll be faced, you may find yourself house poor.

2. You have a variable income. If you find that your income has some slow periods when you have trouble making ends meet, taking on a home may be the straw that breaks your cashflow’s back.  Most people with a variable income, unless it’s very high, find budgeting difficult. Taking on home ownership – a mortgage, taxes, insurance, utilities, maintenance – means taking on a ton of stress.

3. You work in an industry where employment is seasonal or erratic. Ditto above. Unless you really sock it away while you are working, you may find it hard to keep up with the financial demands of ownership.

4. You don’t have the time, skills or desire to deal with home maintenance. There is always something to be done on a house. There are gardens to be weeded, walls to be painted, lawns to be cut, plumbing to be fixed, curtains to be replaced, roofs to be repaired, snow to be shoveled, carpets to be cleaned, furnaces to be maintained… the list goes on and on and on. Home maintenance can be expensive. One rule of thumb is to estimate between 3% of the value of your home every year to keep it in tip-top shape. So on a $200,000 house you’d need to include about $500 a month in your budget for maintenance. If you can do it yourself, you’ll save on labour. If you must pay someone else, your costs will be higher.

5. You’ll wipe out all your savings. Some people will do ANYTHING to get into a home of their own. They take money from their retirement savings plans. They annihilate their emergency funds. Once they’re there, expenses start cropping up and they have no safety net in place to see them through. If buying a house gobbles every red cent you’ve managed to squirrel away, you should wait until you can own a house AND have a safety net.

6. You move often. If you work in a career that has you relocating often, the costs of buying and selling are prohibative.  Nomads live in tents for a reason. Getting in and out of home ownership (sales commission, closing costs) can wipe out any equity you’ve built up, assuming the market has been going up in your area. And if the market’s taken a turn for the worse just when you’re pulling up roots again, you’ll eat the loss.

7. You can’t afford to own in an area in which you would like to live. For the sake of home ownership, people move far away from friends and family, from their jobs, from the lives they love. They become house-poor in a place they don’t even want to live. And they add huge commuting costs both in terms of money and time.

8. You’re not financially responsible. You’d think this would be a given, wouldn’t you? Not so much. Loads of people who are clueless about their money have bought homes. They haven’t had the discipline to save up a healthy down payment. They don’t even know for sure how much they make each month. They don’t pay their property taxes on time. And they haven’t given a thought to what they’ll have to do to keep the place from falling down.

9. You love being able to write a cheque for rent and then not sweat the details. If you’re a gad-about or hate routine, home ownership may not be for you. Ditto if you’d rather travel than buy furnace filters, shop for shoes than snow shovels, or go back to school than refinishing the floors. If home ownership is going to get in the way of other things you want to do with your life and your money, you’ll only end up resenting your house. So if Saturday morning in a café with a latte is more attractive than heading out to cut the lawn, stick with renting.

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Gail Vaz-Oxlade

Gail Vaz-Oxlade wants YOU! Join MyMoneyMyChoices.com to get smarter about your money and help others get smarter about theirs. Isn’t it time we eliminated financial illiteracy? Come find me on Google+ and on Twitter.

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45 Responses to “9 Signs Home Ownership Isn’t for You”

  1. avatar Bernie Says:
    May 9, 2011 at 4:04 am

    Love it, the wife and i did this last January 2010 and are sooooooooo much happier. Of course it helped we love the area, it was a new building and it has in suite laundry.

    We now put a whole mortgage payment away every month as opposed to going the complete opposite (debt) when we owned. We had that house stuffed like a PIG, now were lean, mean and cash rich instead of debt/house poor.

    Bernie

  2. avatar Adrian Says:
    May 9, 2011 at 4:36 am

    I Often Contemplate Bernie’s Scenario Mentioned Above ^^: Is A Renter Truly ‘Losing Out’ If He/She Saves The Equivalent Of A Mortgagee’s Interest Every Month While Renting? I Highly Doubt It… 😉

  3. Here for years I’ve been thinking I’m a loser for not buying and it turns out I’m just being fiscally responsible (for the first time in my life). It’s nice to hear someone in a financial circle say that you don’t need to own a home to succeed.

  4. avatar Amelia Says:
    May 9, 2011 at 7:39 am

    Wow does that house in the picture look spectacular but Hubby says that turret round thing, while nice looking, is a nightmare for mainenance.

    We and the bank own a small home which is bigger than anything we could rent around here and the mortgage is smaller than any rent we would pay around here. So I think we’re ok. We do the maintenance ourselves (Hubby is handy). Besides, even though our house doesn’t look like the one in the picture, it’s still my dream house because it’s mine and I painted the bedroom walls the lilac colour I’ve always wanted.

    My only worry is two shits hitting the fan at the same time. We have enough saved to replace the roof but not the roof and the septic together, so I pray we never have more than one catastrophe per year.

  5. avatar jessie Says:
    May 9, 2011 at 8:04 am

    Thanks for this post, Gail! I have never wanted to own as maintenance is my idea of a nightmare, and I’d rather just rent something stellar for the years I have children and have the flexibility of leaving quickly once they’re grown and investing my mortgage payment. Plus, I have life goals that make saving for home ownership a mega-drag. For my partner, however, home ownership is a dream. I’m willing to do it as it’s his one real “thing” whereas I have many “things”, but I’d like for him to read this post all the same. I often wonder how much of his “dream” is “Dream” (ie: does he really know what’s involved?).

  6. Totally agree (except for the point on the 3% of home cost for maintenance, I never understood how a $150K 2000 sq. ft house in Prince Edward County could cost LESS in maintenance than a $400K 800 sq.ft. house in Toronto…)
    I’d rather a cost per sq. ft type of calculation there.

    I never understood people who think renting is a waste of money. It buys freedom. Now I’ve owned a home since I was 26 but renting definitely has its appeal (now so does home ownership however). It would be good to see a twin post on the 9 signs homeownership is for you actually.

  7. avatar Samantha Says:
    May 9, 2011 at 8:17 am

    Thank you! People keep telling me that I’m wasting my money by not buying a home. They keep insisting that home ownership is the only way to go.

    I briefly had a home for a year when I was with my ex-husband. Although it is nice to have your own place, I found there was just TOO much chores. During our separation, I had to take care of a lot of the chores by myself and it was exhausting. Although I still struggle with the idea of perhaps buying again, I really enjoy apartment living where putting out the garbage means carrying one small bag to the end of the hall and throw it down the chute, and there is no shoveling snow or cutting grass.

    And at the age of 36, I have now finally reached 400k in savings. None of my friends know this, so they keep insisting that home ownership is the right way to go, but home ownership is too expensive where I live (or too far away from where I work), and I get a strong sense of security knowing I have my savings diversely invested instead of just one house.

    Home ownership isn`t the only way. If you ENJOY owning a home, more power to you. But not everyone does.

  8. Interesting perspectives and constructive discussions! I’m a homeowner and sometimes resent all the work involved but luckily have a very handy DH. We also had whole life insurance but it turned out to be a nightmare for us so we cancelled it and used the forced-savings component to buy rental property. That scared me, too, for the reasons mentioned before. But it’s turned out fun. I like seeing the fruits of my investment first-hand and we have (mostly) great tenants. We all combine our efforts to improve the place; some paint their units, some do their own upgrades, others ask to do spring yard work for the exercise (really!) Most tenants are retired or recently single. I understand why they choose to rent at this stage of their lives instead of owning; it’s smart and efficient. I know being a landlord isn’t a fit for many people but I’m happy it works for my family and our tenants who choose the renting lifestyle.

  9. @Samantha

    Smart girl! Kudos on your savings at your age! And your comment of diversifying your capital instead of investing solely in home ownership is wise, wise, wise.

  10. avatar Jennifer Says:
    May 9, 2011 at 9:12 am

    The only thing I can’t understand is #4, as Geoff already mentioned. Maintenance costs do not vary that much from region to region, however house prices do. Makes no sense to consider the value of the home when calculating maintenance costs IMHO.
    I prefer to budget for the big things – ie. $500 per year for yard maintenance, $100 for variable home maintenance, % of time left before the roof, hot water heater, etc need to be replaced… the age of the home has a lot to do with how maintenance is budgeted for as well. Obviously if you buy a fixer-upper you’re going to have to include a lot more into your maintenance budget than if you buy a brand new condo where maintenance is covered mostly by strata fees. Both could cost you 200k depending on the area… both could cost you 500k… or one could cost 200k and the other 500k for the same properties in different areas.
    Just sayin’…

  11. Great post, Gail! You’ve offered up some good advice lately for us prospective home buyers. That’s a good conversation to have with the wife, too, about being on the same page when it comes to maintenance and generally taking care of the house.

    Austin

  12. Great message, Gail. Most of the information on the web geared toward first time buyers is put there by mortgage lenders and real estate agents–both of whom have a direct financial benefit when people buy houses.

    Homeownership can be great for some and not for others.

    As for #Geoff, he’s right on the money that using a percentage of house cost is a pretty poor way of estimating maintenance costs. I think that’s people use that method because no one’s been able to come up with a better rule of thumb.

    The age of the house, features, and length of deferred maintenance drive costs up higher, not the value you paid for it.

    A cheap little house with a very steep roof (like mine) could cost $10,000 (U.S.) to replace. While a $500,000 ranchburger in a suburb with a very modest pitch could cost as little as $6,000.

    So if you want to know what something will cost on a house, ask a contractor.

  13. You’ve named all of the reasons that I don’t own a home!! The only one missing for me, is an insecure job (contract work) which could disappear, leaving me both financially at risk but also willing to travel to find work.

    The ones that REALLY spoke to me included #1, #4, and #9.

    I still have the dream of home ownership but it’s definitely not the right time for me.

    Thanks, Gail! :)

  14. avatar jenn b Says:
    May 9, 2011 at 9:57 am

    As someone in the middle of home renos- the value of the house does factor in- We have a 974 sq. ft. house that we just re-insulated, re-sided and re-windowed. There in no way we could have afforded to do this if we had the 2000+ sq. ft. home of much higher value. ( more windows, more siding needed etc…) As well- When we do the floors in the basement- we won’t spend as much. While there are number of chores that need to be done- again- I value the smallness of my house because it makes the amount of upkeep smaller as well. I was 33 when we bought out first house- 20% down etc….. for us it was the right choice- but we also realize that we are not going to get 100% of the money we put into the house back out of it.

  15. I never felt strongly about home ownership, but my hubby does – so we just bought a place together. It’s a relatively new place (built in 2004 by a development company with a good reputation) and so hopefully low-maintenance, though we’re saving money for maintenance regardless. We’re well within our safe mortage to gross income ratio (1.86), we both have relatively stable office jobs with regular salaries, and while neither of us is super handy, we’re willing to learn to do small jobs, and will pay to have bigger or more complext bits done. It’s a beautiful house in a central location, close to transit and in an interesting up and coming naighbourhood. We’re enjoying slowly decorating it together and making it our own fabulous little nest. Neither of us considers it an investment (with the housing market showing signs of shakiness, there’s no guarantee we’d make money in the short or medium run if we sold), but we have to live somewhere, and this both gives us more control over our living environment and a bit of forced savings over the long term – maybe even a small profit if we’re lucky. But it’s expensive – on top of the cost of borrowing, we’re paying some of the highest property taxes in the country, plus whatever we pay to fix stuff that inexitably breaks or wears out. The way I look at it, you always pay for housing – either through rent or through mortgage interest, property taxes, etc. You just gotta decide what level of ownership – and risk, and responsiblity – is right for you.

  16. avatar Tracey H Says:
    May 9, 2011 at 10:12 am

    I, too, agree with wondering about the percentage for maintenance on a house. You could own an identical house on an identical-sized property in 2 different areas and the price of the homes could vary by 2 or 3 times. I find some years I only pay for fertilizer and other years I have to replace the roof and furnace and air conditioner all at once. It’s hard to budget for (fortunately, we have non-registered money we’re saving towards retirement so we just dip into that).

    My daughter is in a low-paying retail job but wants to own a home more than anything else. She’s saving well (so far she has $15k saved) and she knows she’ll get a boarder when she buys, but she doesn’t qualify for a very big mortgage so she’ll be living with us for many more years while she saves up a big enough down payment to get into the market. Fortunately, she’s extremely handy and artistic (and has a diploma in interior design) so she’s likely to really improve a house/property.

  17. I believe the maintenance issue is just a rule of thumb — based on the value of the house. Gives you an idea of how much to spend. I could spend tons on my old house to upgrade but to maintain I mostly do it myself. Sweat equity counts towards the 3%. If you know the furnance is going in the next couple yrs then you put that into your planned maintenance. I mostly get big jobs done every 2-3 yrs like $8000 to put vinyl decking on the huge deck or this year going to have new siding with some insulation to reduce the heat bill (& dust bunnies)!

  18. re: percentage for maintenance

    While it may be true that some maintenances will be similar in similar footage house, using the example of PEI vs. Toronto for identical footage, I bet it costs a lot more to have a roof replaced in Toronto then it does in PEI.

  19. avatar psychsarah Says:
    May 9, 2011 at 10:41 am

    To all those longing for home ownership, please read #5 about 10 times! We bought before we turned around our financial ship, thanks to Gail, and basically our whole savings went into the down payment and closing costs. Boy were we stressed to learn about all the “little” things that add up when you buy, like lump sum property tax bills two weeks after you move in, until you can get onto the equal payment plan the following year-yikes! It wasn’t pretty for a while there, let me tell you. Follow Gail’s advice on this one-you won’t be sorry!

  20. Owning a home costs more if you are basing the math on rent = mortgage.

    If your mortgage = half your rent and the maintenance, utilities and taxes doesn’t eat up the difference you can still do ok. This really depends on the housing market you live it. In our case, we could not rent a four bedroom place for the amount it costs us to run our house. Mind you we are good candidates for the other points.

  21. avatar shorty j Says:
    May 9, 2011 at 11:04 am

    amen to this! There’s so much social pressure to own a home that sometimes people listen to their heart a little TOO much. (like my brother, who recently bought a house with 0% down, and whose employment contract is expiring in a year… oye.) One of the things I love about living in a ridiculously expensive city is that my mind is made up for me–I straight up cannot afford to buy ANYTHING, and it’s made me love renting that much more. 😛

  22. We were fortunate in that we found a house we could easily afford–the mortgage plus property tax combined is about 70% of what we were paying for rent. Our situation was a little different–our rental lease wasn’t going to be renewed since a company had bought the building and were planning on changing everything into condos. Turns out they bought a good majority of the OTHER buildings that we could have rented from as well–we were left with 2 rental choices that would still allow our pets–and one of them suffered the same fate (condo-izing) a year later! So while we did end up buying sooner than we planned, it was well worth it (for me) to no longer STRESS about losing our home yet AGAIN and trying to find yet another pet friendly rental property.

  23. I think renting absolutely makes the most sense for people who are childless and petless. Unfortunately, in my area, rent on places where you can have kids and keep pets is just completely astronomical (and we don’t want to move to another area, for the same reasons you cited about home ownership). Even my SIL, who herself is mature and has just a single mature cat, had such a rough time finding a place to rent. For ourselves (two kids), we’re extremely lucky that my parents own several properties.

    There’s an income issue here, too. House prices have done nothing but rise (they stayed the same at the worst part of the recession) and incomes simply have not kept up. Again, would love to just take care of this by moving away, but would life really be better if we were so far away from the people we love, or commuting, or taking jobs with income so much lower it’s not a help?

    So…in all of this, there is a lesson: Think about your kids when you’re planning your financial lives. Think about the things you would have loved to have had a hand with when you were just starting out, and make it your goal to give your kids help in those ways. And teach them about saving, planned spending, and budgeting from a very young age. They’ll have a leg-up like no other if you do those things! You’ll change your family tree.

  24. avatar Procrastamom Says:
    May 9, 2011 at 12:06 pm

    #10 – You don’t understand how mortgage interest and terms work.

    Years ago I worked as an Administrative Assistant for a mortgage company. A lady phoned in to get the balance on her mortgage and insisted I was wrong for telling her that the principle had only gone down by x number of dollars in the two years she’d owned the house. She was INSISTENT that because she’d paid $2000 a month for two years that the principle should be reduced by $48000. She just did not get it.

  25. Home maintenance costs…
    Somewhere Gail mentioned to look at the price of the house (not land + house) in areas where the price of land is [stupid] high.
    2000 sq foot in higher end neighbourhood will cost more than in a lower end area because the next buyer will expect higher end renos. So square footage alone is not answer (but a valid point to include in the math).
    Look at the cost of replacing the house alone (for same sq ft and quality of parts) in your area to get an idea of what 3% of the cost really is. When you calculate the 3%, you have to account for the rising cost of anything throughout the life of the mortgage. Having a swimming pool in your backyard means that your maintenance will be higher than the neighbour’s. What is in your house and important to you?
    In some cities, you might find good maintenance people for a lower price than other areas. In other cities, the prices might be high for any quality of labour.
    Not easy math, but anyone owning a house should put at least $200/mo for maintenance (look at Gail’s lists of what is included in there) and her value of $500/mo is not unreasonable over the life of the house.

  26. Region matters. We bought our house in 2003, when moving to this city in northern Ontario. At the time, rent was substantially higher here than a mortgage, and all associated costs. Eight years later, not only is rent still higher, but apartments or rental houses are virtually impossible to find, with a vacancy rate near 0%. We may have bought with only 5% down, but we bought well under our pre-approved rate, with a payment that could be paid on minimum wage, and a mortgage that should be paid off in the next 5 years. Big city, or southern Ontario economics do not always translate well to all other regions of the country.

  27. Re: home maintenance
    Although I agree with other posters that home value is not the only factor for determining maintenance costs, I do think it is an important one.

    If the same house existed in Toronto and Prince Edward County, the Toronto house would be much more expensive. I would argue that buyers also expect higher-end finishes in expensive houses. While vinyl and formica might be acceptable to buyers in Prince Edward County, I know that Toronto buyers are looking for hardwood and granite… along with crown moulding and a professionally landscaped yard!

    Other factors would of course include the home’s age, size, and current condition. But it would be impossible to include all of those factors into a simple formula. Gail’s rule of thumb is a helpful guide though!!

  28. Great posts all! I fell into the “move around a lot” category – although I never expected it. My first home is rented out since I couldn’t organize myself enough to sell it. My second home was sold at a substantial loss (1/3 of what I had paid) – however my employer (who had transferred me to the U.S.) paid all my closing costs and reimbursed me 75 cents on the dollar for the loss. It was deal I couldn’t pass up. I now rent in Houston and love the freedom of it – I’m prepared for transfers this time.

    I agree with the posters who say that location is important in a decision to rent. Houston has tons of stable corporately managed rental apartments. There is plenty of choice and one could rent for a lifetime. Calgary went through a horrible period of evicting renters to turn the apartments into condo conversions and there’s a huge “secondary suite” debate going on. I’m not so sure that I would feel comfortable trusting in a “rent for life scenario” in Calgary.

    The other issue that sometimes gets me thinking is retirement. Many of the retirement savings scenarios that you read about seem to count on you owning your home in retirement. I’ve tried to strike a balance. I have socked away all the equity that I got from my home sale and I’m saving what I can into a “buy a home in cash” fund. My intent in retirement is to pay cash for a small home. I’ll use my retirement savings to pay for maintenance and lifestyle.

  29. Ditto on the maintenance as a percentage of value comments. There have been very large increases in home values across the country in the last 10 years, so this approach makes little to no sense.

    Let’s put it this way: My very modest home in Vancouver suburbs cost about $250,000 7 years ago. Because of the crazy land value appreciation, my friend buying the same house today could pay $500,000. Does this mean they should pay more than double in maintance costs? Of course not. The difference in cost for most of these houses is primarily due to differing land values.

  30. Lots of great discussion all.

    Home ownership is a decision that should be made after you have determined what your long term goals are. If you are happy and plan on living there for 20 + years, then home ownership is for you. In less then 20 years the asset is paid off (if you budget well) and growing in value. Yes you will have upkeep and maintenance, but you are able to have it to your taste – not someone elses.

    If you are the type of people that can’t live in the same city for more then 5 years, home ownership is not for you. It will cost you more then you ever imagine.

    Regarding the cost’s of home ownership, that’s why it’s important for people to understand all the cost’s involved up-front before getting in. Lot’s or resources and people to advice in this area. What scares me with the low interest rates we have been having, is too many people are ‘house poor’ – taking on more house then they can afford. I feel it could lead to a major correction in the real estate market. It’s only a matter of when.

    Lastly, M I read your comment that you posted.

    May 9, 2011 at 9:03 am
    Interesting perspectives and constructive discussions! I’m a homeowner and sometimes resent all the work involved but luckily have a very handy DH. We also had whole life insurance but it turned out to be a nightmare for us so we cancelled it and used the forced-savings component to buy rental property. That scared me, too, for the reasons mentioned before. But it’s turned out fun. I like seeing the fruits of my investment first-hand and we have (mostly) great tenants

    What concerns me is that you are comparing risk protection in taking on more risk. The challenge you now have upon death is disposition of the property and tax liabilities from this ‘rental property’. For, you cannot have two homes as your
    ‘principle residence’, upon your death this will be factored and taxed accordingly by the CRA.

    To all considering this, firstly talk to a well quailified advisor to explain these implication whenever you consider cancelling an insurance product to purchase a rental property, so you are aware of the implications down the road.

    Have a great day all!

  31. Yes, to what Ken said re: moving. When we bought in 2003, we had two early school-aged kids, but bought our retirement home…2 bedrooms, less than 900 sq ft, plus unfinished basement. We knew it was a squeeze, so renoed the basement for a family room, bedroom and second bath. Even with this reno included, we were at less than $100,000 put into the house with mortgage included. We continue to create our retirement home, having done half of the large backyard in patio, pond, waterfall, screened gazebo, with hot tub. When we bought, I said I was leaving in a pine box. Eight years later we owe about what some would owe on a new car, can vacation at home, use our yard year round in a very cold climate, and don’t need to downsize when the kids leave. All on one income. I wouldn’t go back to renting for anything.

  32. Home ownership was definitely for us. I didn’t think so at the time but I’m very cautious about these things. 10 years later we have 4.5 years left of mortgage and 1.5 years of daycare so we’ll be quite happy! That’s the thing. Once you pay off the mortgage, the house is yours to keep :-)

  33. This is really nice to hear. My whole family has drilled this idea into my head that home ownership is the end all be all of life’s goals. When I moved out to live on my own and become independent (and afford it) I had so many offers from different aunts and uncles, even my grandparents wanted my to live with them over renting a suite and “wasting money”. For a while I was convinced that they were right until I starting watching Gail’s show. Phew!

    Recently I have moved in with my boyfriend and we have looking at homes in areas that are quieter and much less expensive than where we were before. At the moment I am in a carreer change and so is he, so we have put home ownership on hold though we are still saving for it. I don’t feel that intense pressure to own a home anymore, especially since I am not ready for it yet. Thank you Gail, this has really given me a boost of confidence!

  34. Thank you Gail for this comment!
    My husband and I just made the decision to walk away from our house up north because we had become house poor. He works only seasonally ( trade worker ) and while that is fine for him… there are no full time or decent jobs up north for myself or our two daughters… so after some long debate and knowing that the home we purchased about 9 years ago would not sell over night.. we did what we thought best.. walked away and let the bank have it…
    Maybe not the best solution and there are definately parts of living out in the country that we all miss.. not to mention that my husband now works up north and the rest of our family is down here in the city again… we now are trying to clear off the rest of our debts and are not sure as to where to start…
    I digress though… your thoughts on renting NOT a bad thing… has given me some relief.. thank you for the list of 9 things that home ownership is not for you… this article was an eye opener!

  35. “Once you pay off the mortgage, the house is yours to keep.”

    True, but as time goes by you may:
    -need a new roof
    -need to replace windows and gutters and soffits
    -need to repave the driveway
    -need a new furnace, updated electricals, plumbing repairs
    -need to repair fencing, steps, patio, deck
    -need to renovate and modernize
    -need to deal with contractors

    And every year you need
    -to shovel snow
    -to clean eaves troughs
    -to add topsoil to lawn, weed and feed, cut grass
    -to edge flowerbeds and walkways, plant, thin, transplant
    -to prune, replace old shrubs
    -to rake and bag leaves

    And every year you are getting older, developing other interests, wanting to travel, and getting tired of all the constant responsibilities of owning a house; and you’re either letting things go or spending a lot of money to have others come in to do all the work so that your house retains it’s value. And, of course, every year you are paying higher taxes on your home.

    There’s nothing wrong with renting. It’s up to you.

  36. Such a timely message. I have lived in a home for many years as a single parent, paid off the mortgage and put my two children through university. I want to sell my home and move much closer to work (I currently have a 75 minute commute each way) and will rent for the next while. I cannot afford to buy in the area of Toronto where I would love to live and think it would be fantastic not to spend my Friday evenings planning all of the maintenance/chores I have to burn through on the weekend in order to maintain my property. And of course worrying about finding the cash to keep everything tip-top rather then travelling, reading or having fun with friends/family.

    The biggest hurdle for me is the feeling I am “wasting” money by paying rent when I could be building equity. A strong message from my financial planner for so many years that is tough to shake.

    Thank you for a great post.

  37. avatar Kathleen Says:
    May 9, 2011 at 9:50 pm

    I guess I’ve almost pulled a #7 You can’t afford to own in an area in which you would like to live. Hubby and I and two kids under the age of 3 were renting a two-bedroom apartment in Toronto. We knew that would not be sustainable in the long-term. But it’s not so much that we can’t afford to own a home in the GTA. Rather, we didn’t want to be paying an exorbitant amount of money in order to live in our own home in the GTA. Sure, the bank pre-approved us for about $450,000 but we decided that we had better goals for our money than just putting it towards mortgage, maintenance, taxes, etc.

    I did have some relatives telling me that I was wasting my money by paying $1000/month in rent when I could be paying $1000/month in a mortgage and building equity blah blah blah. But the way I look at it, I now have a bigger home and more land for less price in the Niagara Region compared to what they paid for their townhomes/duplex in the GTA. And I don’t really live all that far from my relatives/friends in the GTA, not to mention all the great food, culture, entertainment, and shopping. Hubby and I are lucky that we have good paying steady jobs in health care that are not limited to the GTA.

  38. My friend and I had a very similar debate recently. She lives with her parents with her boyfriend and they are saving to buy a house. She thinks that renting is a waste of money and is only going to get in the way of owning a home. I on the other hand am renting with my boyfriend. We are still saving for a home (less than her as she has no real bills.) I just don’t see the huge hurry to get into your own home with all the commitments really. Not to mention the shock to the system it will be for them to go from living home with no responsibilities to a house of your own with every responsibility. At least my boy and I have the meals, housework, yard work, division of bills, etc. figured out. Right now all those chores are done for them and their money is separate. I would definitely want to live with someone first before making that huge a commitment.

  39. Something to consider in this debate (the ‘debate’ with yourself as you determine which path is best in your own circumstances) is that owning a high-rise condominium requires a LOT less maintenance, both $ and time, than owning a house.

    Somebody else has to take care of snow removal, and the gardens, . . . . If some plumbing or electrical work needs to be done, (unless you negligently caused the problem), the condo corp pays for it. There’s not much more maintenance work to be done by the owner than by a renter (owners would need to replace a broken fridge, and renters wouldn’t, but both need to clean the bathroom, and neither have to prune the hedges).

    Of course, you have to pay the monthly condo fees, which is the equivalent of saving for planned maintenance costs, but it often works out to be less per month, because the various costs are shared (there’s only one front door and drive-way that requires snow removal, but in my building at least, there are 200 units all paying for it).

    There’s always the chance of a special assessment (ex. $9000 per unit, because all the windows need to be replaced, and the condo’s budget can’t absorb it), but the risk and frequency is a lot lower than in a house. There’s an exception to that rule, I think, in certain places like Vancouver, where the risk may be the same or even higher due to environmental differences/risks. Another exception is really old condo buildings – they are the equivalent of old houses, in that everything needs to be replaced/fixed, and that costs a lot of $.

    The way I see it, owning a high-rise condo has a lot of the pros and only some of the cons of ownership, and a lot of the pros and only some of the cons of renting.

  40. @ megan – a big risk is that in a downtown, condos are always the first to fall in value. Everytime.

  41. @geoff – Very true. Certainy some of the cons of ownership (i.e. risk of devaluation) are present and must be taken into consideration. I certainly wouldn’t buy a condo (or any property for that matter, but especially a condo) in Vancouver, for instance.

  42. Home ownership is not for everyone. Many many reasons. But before you talk yourself out of buying a home, consider this. Landlords are not running social housing nor charity organizations. So why are they doing it? They believe in the long run they will be better off. And the better off is significant, because there is significant risk as a landlord. e.g. tenants that… don’t pay the rent … trash the place …. don’t take care of the place…. put a grow op in the basement and burn the house down and thus void the insurance because of the illegal grow op.

    With all of this risk, why would anyone want to be a landlord?

    Think about it.

  43. avatar wondering Says:
    May 15, 2011 at 5:09 pm

    @Paul – That depends. Around here, people are landlords because they are squeezed so tight by their bills that they need someone living in their basement to ensure that they can make ends meet. Others are speculators who expect to make their profit by selling the house and having a renter takes the edge off those bills. In some few cases, the renter pays all the costs of the house for the year, but it usually doesn’t work out that way. Plus there is a big risk that house prices will not continue going up in value over the next while and may in fact decrease just as interest rates increase. There is no guarantee that the would-be speculator is going to walk away with the expected profit.

    Then there are the professional landlords, usually of multi-unit dwellings. Economies of scale may actually allow these folks to make a profit. But they often squeeze every penny until it bleeds and don’t do required maintenance. While there are well maintained apartment buildings, there are also a lot of rundown ones. As with everything, you get what you pay for (if you’re lucky).

    At any rate, what I’m trying to say Paul, is that while you imply landlords get rich while renters don’t, but at best that is an aphorism. At worst, it’s the kind of misguided belief that can lead to a lot of financial headaches.

  44. Home equity is a scam too. You will never see it EVER again. You will never turn it into grocery expenses or vacations with friends/family. The “equity” you have built is essentially gone forever. Money is for spending and lending not for sitting like a rock costing you small fortunes each and every year. The best reason for buying a home is that you get to live in it free of a monthly payment (except for rising property taxes) in your retirement years. However, most people do not do that. When the kids leave the nest, most people wish to downsize as utilities bills, maintenance costs (time, effort and money), and rising property taxes eat away at their “nest egg.” The best approach is to just save your money for both retirement and emergency and when your retire you should have a decent amount for both for the rest of your life. Heavy cash positions earning interest (even if just a little) and a juicy retirement account is a much more important goal for most people. You are not throwing your money away on food. You are not throwing your money away on clothes. You are not throwing away money on housing.

  45. I’m currently trying to convince my husband , that we can’t afford this house. We’ve had to refinance it 3 times in 10 years to pay off other debts.
    I recently inherited money from my parents and after paying off more debt , yet again, could have a nice litle nest egg of about 40 thousand. He doesnt seem to get that I’m not willing to subsidise our monthly expenses from the savings, anymore.
    Our monthly expenses are more than our income. So the savings would slowly be gone, and then what? Back in debt?
    He does no home maintenence. Everything eats away our income..
    Convincing a 40 year old man to grow up and be realistic is a real chore.
    To top it off, I cant work anymore because of poor health. The stress of this house is making me worse.

    My advice to everyone thinking of buying a home, Think again, then think again.
    Be realistic. And find a husband that knows the difference between a hammer and a screwdriver. All the home maintainence falls on me or the contractor.

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